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4 Reasons to Add Southwest Gas (SWX) to Your Portfolio Now

Zacks Equity Research

Earnings estimates for Southwest Gas Holdings, Inc. SWX have been revised upward over the past 90 days, reflecting analysts’ confidence in the stock. The Zacks Consensus Estimate for 2019 earnings of the company has moved 4.1% north to $4.04 per share in the said period.

Southwest Gas, along with its subsidiaries, purchases, distributes, and transports natural gas in Arizona, Nevada, and California.

Let’s focus on the factors that make Southwest Gas an attractive stock at the moment:

Zacks Rank & Price Appreciation: Shares of Southwest Gas have gained 1.2% against its Zacks S&P 500 Composite’s decline of 7.8% over the past 12 months. The stock currently has a Zacks Rank #2 (Buy).

The current dividend yield of the company is 2.7%, which is higher than the Zacks S&P 500 Composite’s 2%. Southwest Gas raised its annual dividend rate over the last five years at a CAGR of 9.52%.

Estimates Movement & Surprise Record: The company’s 2019 earnings are pegged at $4.04, reflecting nearly 6.64% year-over-year growth. Its bottom line surpassed the consensus mark in three out of last four reported quarters, with the average positive surprise being 31.31%.

The Zacks Consensus Estimate for 2019 total revenues is pegged at $3.12 billion, reflecting year-over-year growth of 14.86%.

Strong Capital Expenditure Plan: Southwest Gas aims to invest nearly $2 billion within the 2018-2020 time period for strengthening and expanding its existing operations. Courtesy of its cash flow generating capacity, the company plans to fund 50-60% of its planned capital expenditure through internal cash flow. A wise plan amid rising interest rates will help the company lower its interest expenses.

Consistent Customer Growth: The company provides services to more than 2 million customers, as well as continues to add new customers and expand operations. The increase in population and employment growth in its service territories are boosting its customer base. Southwest Gas aims to add more than 33,000 customers per year over the 2018-2020 time period.

Other Key Picks

Other top-ranked stocks from the Zacks Utilities sector include Spire Inc. SR, Pinnacle West Capital Corporation PNW and FirstEnergy Corporation FE, each currently holding a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Spire, Pinnacle West Capital and FirstEnergy reported positive earnings surprise 14.37%, 6.15% and 3.67%, respectively, in the last four reported quarters.

The Zacks Consensus Estimate for 2019 earnings for Spire, Pinnacle West Capital and FirstEnergy has moved up 0.8%, 1.04%% and 0.4%, respectively, in the past 60 days.

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